How to Invest in Stocks: Step by Step Beginners Guide

Never depend on a single income. Make an investment to create a second source — Warren buffet.

Are you planning to invest in the stock market? Are you new to the stock market? And you don’t know how to begin? Then you are at the right place this article will help you to know what is stock market and how to invest if you are a beginner.

Before starting anything first let’s see what is the stock market. It is a place where buyers and sellers meet to buy and sell shares of publicly held companies. Here buyers and sellers mean individual and institutional investors. Where does the buying and selling of shares take place? The stock exchange is a place that facilitates buying and selling of shares. You would have heard NSE, BSE where the buying and selling take place.

The first step to enter the stock market is to open a Demat account which will hold financial securities in electronic form. After the Demat account is opened you need to open a trading account to buy or sell shares in the stock market.

After opening a Demat account you must determine how much amount you want to invest. That is how much amount of your earning you want to save. You must be clear with your investment goal, i.e., you should know why you are investing.

Invest in Yourself

You are new to the market you don’t know which company is performing well and which is bad. For this, one should read different books, business magazines, one should be updated with the news. You should know what is happening in the company or what is going to happen in the company. You invest in yourself by increasing knowledge.

After opening a Demat account and gaining knowledge, you should start investing, the investment amount should be small, you should not invest one lakh immediately. This is the beauty of the stock market that there is no minimum amount to start an investment.
At first, you may make a loss but after a while, once you start understanding you can earn a profit on your investment.

Which Company One Should Invest?

Investment should be made in business you understand, you should be able to find out what the company is doing, how the company is performing these past years, what do different ratios of the company indicate. Many ratios determine the finances of the company. The same can be determined with a stock screener which will help you to find stocks out of thousands of stocks that will match your investment strategy.

Keep Track Of The Performance

After the stocks of the company are purchased, one should keep track of the performance of the company, whether the prices of the company are going down or rising, is there any news related to the company which could affect its price, whether you should hold or sell the shares. You can prepare your stock research report to keep track of your portfolio.

Diversify Your Portfolio

While investing in the stock market one should diversify their portfolio that is one should invest in different industries so that if shares of one industry fall the investor does not incur losses if the portfolio is diverse.

If You Are Greedy, You May Lose Everything
The most important rule or learning that one should remember is never to be greedy. You may earn profit in your first investment that does not mean you are an expert, and you start investing a huge amount in stock in greed of earning huge profits, it may lead to losses if proper research and analysis are not done. So, you should always start small and gradually increase your investment along with knowledge.

Free Advice

If stock market experts were so expert, they would be buying stocks, not selling advice. You should avoid people who give you free advice to invest in some random stocks. Before making any investment or following any advice, you should prepare your stock research report. It is saying that free advice is often overpriced.

Invest Regularly And Continuously

The act of saving and investing money regularly will significantly change the way you live your life in the future. One should avoid investing in a lump sum, you should change your investment portfolio with a change in market condition, this will not only increase your profits but also increase your experience.

The best investment strategy is to not have an exit plan, if you follow the above-mentioned steps to begin your investment journey, you won’t require an exit plan because you will be habitual to what you are doing and start enjoying investing. Just remember the famous quote by Peter Lynch “in this business, if you are good, you are right, six times out of ten. You are NEVER going to be right nine times out of ten.”

Originally published at https://www.selfgrowth.com.